Megasteel employees to receive half compensation

By P PREM KUMAR / Pic By BERNAMA

About 300 retrenched employees of Megasteel Sdn Bhd could receive half of their unpaid salary and benefits, said Deputy Human Resources (HR) Minister Datuk Mahfuz Omar.

Mahfuz said Megasteel — once an industry leader until it ceased operations in 2016 — may compensate some RM3 million of its ex-workers’ unpaid salaries.

Speaking in the Dewan Rakyat yesterday, Mahfuz said 56 cases have been filed by employees of Megasteel from Feb 14 to 24, 2017, involving 300 ex-employees, with claims amounting to RM6.66 million.

Megasteel is 79%-owned by Lion Industries Corp Bhd.

“I have been made to understand by my officers that discussions have been conducted between the HR department with liquidators and representatives of the employees to look into the necessary steps to facilitate the payment of claims.

“In principal, I understand that the related parties have agreed to pay around half of the claims, which represent unpaid salaries of the employees,” Mahfuz said.

Mahfuz was responding to a query by MP Datuk Abdullah Sani Abdul Hamid (Pakatan Harapan-Kapar) on how the government will address companies that take steps to restrain assets from being liquidated by creditors, which indirectly deny compensations to their affected employees.

To recap, loss-making Megasteel defaulted some RM3 billion worth of loans in 2015. It ceased operations of its Banting plant in 2016, as a result of poor market conditions then.

Mahfuz said Megasteel has obtained a restraining order from the High Court on the liquidation of its assets, which stands until Dec 21 this year.

Although the parties have agreed in principal to facilitate payments, Mahfuz said the matter is still being deliberated, as the parties look into the liquidity of Megasteel’s assets for sale.

“It is not impossible that the company will apply for a fresh restraining order, after the current one expires. These are some of the hurdles that could stall proceedings,” he said.

The Lion Group started its first rolling mill in 1978 and ventured into upstream steelmaking with the establishment of a steel melt shop in 1982.